What are stock market margin requirements, and how and why does the Fed control them?
A stock market margin requirement is the fraction of a stock's price that must be put up by the person
buying the stock. The lower this requirement is, the easier it is to borrow money to acquire a stock. The Fed
can raise margins to discourage speculative bank loans which might fuel inflation, and it can lower margins
to encourage bank loans in the hopes that the loans would create new deposits, new money, and economic
growth.
You might also like to view...
In the 1990s the United States' economy generated more than _______ million additional jobs.
A. 5 B. 10 C. 15 D. 20
When the U.S. economy hits a recession, fiscal policy automatically becomes:
A. expansionary because average tax rates go down and spending on welfare programs goes up. B. discretionary because the government is quick to react to changes in the business cycle. C. contractionary because average tax rates go up and spending on welfare programs goes down. D. contractionary because average tax rates go down and spending on welfare programs goes up.
In the monopolistic competition model, the attribute of free entry suggests that: a. all firms earn zero economic profits in the long run
b. some firms will be able to earn economic profits in the long run. c. some firms will be forced to incur economic losses in the long run. d. the market structure will eventually be characterized by perfect competition in the long run.
Which of the following is an example of a compensating differential?
a. paying workers with more years of experience higher wages than workers with fewer years of experience, all else equal b. paying workers who work on the day shift lower wages than workers who work the night shift, all else equal c. paying accountants who have passed the Certified Public Accountant exam higher wages than accountants who have not passed it, all else equal d. All of the above are examples of compensating differentials.